Clegg in pledge on base rate policy

Liberal Democrat leader Nick Clegg has voiced his support for a
change in the remit of the Bank of England's monetary policy
committee (MPC) that could cut the cost of mortgages.

In his main party conference speech in Bournemouth Mr Clegg stated
that a Liberal Democrat government would instigate a new rate
policy that would "take house prices into account".

Such a change could mean getting the MPC to set rates according to
the retail prices index (RPI), rather than the consumer prices
index (CPI) at present.

Unlike CPI, RPI includes house prices.

The difference this could make was shown this week when data from
the Office for National Statistics revealed that CPI had risen from
4.4 per cent to 4.7 per cent, whereas falling house prices caused
RPI to drop from five per cent to 4.8 per cent.

Mr Clegg and his party could press the issue if the next election
produces a hung parliament with the Liberal Democrats holding the
balance of power.

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